Be a Strategic Purchaser

It’s key to conduct research into potential merchandise ahead of buying, lest you end up with non-competitive, unreliable or otherwise problematic stock that you’ll be forced to liquidate earlier than planned.

Below are key elements to consider when making purchasing decisions:

1. Sales rank.

There are two types of ASINs you should be on the lookout for:

Those with an extremely high ranking

Those with no ranking at all.

A high ranking ASIN will allow you to sell an item that’s already popular with buyers, making it a safe bet, while a very low (or non-existent) ranking could open up new markets and establish you as the dominant seller.

2. Product reviews.

A lot of great customer reviews are a good sign about an ASIN. Pay attention to them. On the other hand, don’t let one or two negative reviews spoil the whole bunch.

Often, outliers may be irrelevant to the product, such as when the product description wasn’t read carefully.

3. FBA status.

Ask yourself why that ASIN isn’t already being sold through FBA. In some cases, it could be deemed hazardous and forbidden for FBA.

4. Price fluctuations.

Check out the ASIN’s history.

A history of dramatic leaps and plummets may indicate price wars, which you would be wise to avoid.

5. The competition.

It’s important to consider how many sellers are sitting on an ASIN, which Amazon refers to as “offer depth.”

Purchasing an ASIN that lacks offer depth is an easy way to establish yourself as the main seller, but an ASIN with dozens of sellers can indicate that there is enough demand for that product that you could still stand a chance of getting a piece of that pie.

6. Amazon search placement.

A high-ranking ASIN allows you to capitalize on the profitability of an ASIN whose success is already proven. And a low-ranking ASIN provides the opportunity to expand into new territory as the main seller.

7. Item categories.

You’re probably already thinking in terms of item categories.

Maybe you specialize in one particular area, and it’s working well so far.

Don’t be afraid to venture into other categories, as long as you can back up your reasons for expanding. It may be easier to start by expanding into a related category at the beginning.

Apply a Unique Strategy for Each ASIN

Your company is growing rapidly, and it’s now harder than ever to strategize for each ASIN individually.

At the same time, you understand that applying a one-size-fits-all solution is not the answer.

The most efficient and effective way to handle this is by focusing your efforts on your best-selling items.

2. Understand replenishment.

Is it a perennial best-seller that requires constant replenishment, or a seasonal success that functions on a different cycle?

3. Assess the ASIN’s seasonality.

Is this ASIN meant to sell out in a short cycle, or a longer one?

This is related to the previous point about replenishment.

4. Be aware of liquidation needs.

If you’re an FBA seller, you need to take into account that Amazon charges extra fees for items held in storage for over six months.

Start the liquidation process ahead of time so you don’t get hit with these fees. If an item’s not selling, you may need to lower the price or have it returned to you.

Fulfillment Methods: FBA and FBM (Pros & Cons)

There are two great fulfillment options for sellers wanting to scale their business:

Fulfillment by Amazon (FBA)

Fulfillment by Merchant (FBM)

Each has its own unique features and benefits.

Scaling with FBA

Fulfillment by Amazon (FBA) allows third-party Amazon sellers to delegate their packing, shipping and customer service process to Amazon’s fulfillment centers, rather than handle logistics from their own home or office.

This method offers numerous benefits.

It frees up your time, allowing you to focus on expanding your business and strategizing on items. You won’t have to spread yourself thin or take on more employees — Amazon has its own well-oiled machine to handle the day-to-day aspects of running a business for you. In fact, FBA sellers received 33% less negative feedback than Fulfillment by Merchant (FBM) sellers.

As an FBA seller, your products are automatically Prime eligible. When you consider the fact that 80 million Americans are Prime customers, this means you’ll gain access to a wider range of buyers than you would have otherwise.

Here is a full list of FBA pros and cons.

Amazon FBA Pros:

Prime eligibility.

Hands-off fulfillment.

Buy box advantages.

Multi-channel fulfillment

Lower shipping rates.

Amazon FBA Cons:

Additional fees

Limited access to inventory

Preparing product

Pricey multi-channel fulfillment

Tax obligations

Fulfilled-by-Merchant (FBM)

FBM is a relatively new option that will allow you to fulfill orders yourself, while still receiving the same benefits of Amazon Prime that FBA sellers have access to.

Only top-performing, highly reliable sellers are eligible for this method. It’s ideal for businesses who carry a lot of heavy items, who would otherwise be subject to FBA’s overweight fees.

Here’s a full list of FBM pros and cons.

Amazon FBM Pros:

Hands-on fulfillment

Opportunity for Prime

Fewer Amazon Fees

Slightly higher margins

FBM Cons:

More responsibility

Not automatically Prime eligible

Overhead costs

Potentially lower conversions

Elusive Buy Box

Choose the Right Repricer

As your business expands, the question is not whether you need to invest in a repricer.

After all, 60% of high-grossing Amazon sellers (with a revenue of $2.5M- $10M) use one, which is a good indicator of their importance.

This allows for highly accurate and profit-maximizing results. You won’t have to worry about being priced down or leaving money on the table.

As you grow, investing in an algorithmic repricer — which comes with a higher upfront cost — will earn you more than you could have otherwise.

Want more insights like this?

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Yaffa Klugerman manages marketing content for Feedvisor, the Algo-Commerce company, which uses big data and machine learning algorithms to help online retailers make business-critical decisions. Prior to this role, she worked in public relations and marketing at the University of Michigan.